The process begins simply enough. A Buyer spends what seems like a thousand weekends searching for the right home to buy. Once the buyer finds that home, the selling broker helps the buyer prepare and execute a contract which is sent to the property owner, usually accompanied by an earnest money check. At this point, the signed contract is known as an "offer". No offer should be submitted without careful consideration of the attorney's role in the transaction. Just about all "standard" real estate contracts contain "attorney approval" or "attorney modification" clauses. While an attorney would prefer to examine a contract prior to the submission of the offer, no offer should be submitted unless the contract at least contains an attorney approval or modification provision.

The selling broker will usually point out that the contract has an attorney modification clause and changes can be made later. The broker is only half right! In most cases, the buyer's attorney can iron out many problems in a contract during the contractual period provided for attorney review, however careful review and modification before the offer is submitted can ease the transaction for the buyer.

Modification clauses do the job most of the time, however, recent case law from the courts of Illinois indicate that a "modification letter" actually constitutes a counter offer and thus, a party could back out of a contract when presented with such a letter. For example, on Monday, "Buyer One" offers $100000 to Seller who accepts. The contract is forwarded to Buyer One's attorney who reviews it and makes various minor changes and sends a modification letter to Seller. On Tuesday, "Buyer Two" offers $125000 for the same property. Seller then receives the modification letter from the attorney for "Buyer One". His lawyer, being current with Illinois law, tells Seller that he may cancel the original contract with "Buyer One" and enter into a contract with "Buyer Two." Legal?? Yes! How can buyer's avoid this problem? Allow your attorney to look at the contract before it is signed and handle all modifications at the time the offer is made.

The buyer's attorney will routinely review the various terms of a contract to determine that the contract does not take advantage of the buyer. The attorney typically focuses on the purchase price and personal property included in the sale, the mortgage contingency clause, the inspection clause, and the clause that governs penalties for default. In addition, the lawyer will make sure that the various prorations (taxes, rents, association dues, etc.) are fair to the buyer, and that the seller has provided the required disclosures (as to the condition of the property, radon hazards, and in some cases as to the status of lead paint in the home) and warranties. 

Normally, a contract will also contain an inspection provision providing the buyer with the right to obtain a professional inspector to check the property for defects. Inspection clause provisions vary from contract to contract. Some allow the buyer to request repairs be made to the property, some require that repairs exceeds a certain dollar amount and others merely allow the buyer to cancel the deal because the condition of the property is found to be unsatisfactory. The buyer's attorney will assist the buyer in negotiating with the seller's attorney regarding repairs.

Keep in mind that the inspection and attorney review periods usually last for a short and limited period of time. The terms of the contract will dictate this time. Once the periods expire, no additional changes may be made. It is important for a buyer to get a copy of the signed offer or accepted contract to his or her attorney as soon as possible.

Once the modification and inspection periods are passed, the buyer's attorney will help the buyer manage the mortgage contincy. Most contracts contain a "mortgage contingency" clause, a provision which allows the buyer to lawfully cancel a transaction if the buyer cannot obtain a loan that satisfies the terms of the mortgage called for by the contract. The attorney will make sure that the lender's loan commitment complies, within commercially reasonable limits, with the contract terms and that the proper notices as to whether or not the loan is approved are forwarded to the Seller.

The final tasks of a buyer's attorney before the closing are to make sure that any problems that arise during the final inspection are dealt with by the buyer and to work with the lender, title company and the buyer to be sure that all items needed to close are brought to the closing.

At the closing, the lender will deliver a "package" of documents to the title company. This package is comprised of many documents, including the note and mortgage and maybe as many as thirty to sixty pages of documents disclosures and agreements. It is the buyer's attorney's job to walk the buyer through these documents, pointing out important terms and protecting the buyer's rights against the bank.

The Seller will also come to the closing with a package of documents, including, most importantly, the deed to the property. The buyer's attorney will scrutinize these documents to make sure that the buyer is purchasing and the seller is conveying the correct property, that all taxes and liens are paid, and that title is cleared and insured by the title company. This usually involves a review of the documents and a survey provided by the Seller. If a mistake is made in the process, someone else may end up owning legal title to the home just purchased by the buyer. 

The services of a real estate attorney greatly reduce the likelihood of problems, provide an experienced guide to this very long and complex process and provide peace of mind to the buyers.

The same "attorney modification clause" caveat that applies to buyers applies to sellers as well. In the best case scenario, the seller's attorney should review a contract before it is signed. Any proposed modifications may be treated as a "counter offer" and the other party may decline to agree to changes and cancel the deal.

In reviewing a contract, a seller's attorney will make sure that the buyer's earnest money is sufficient, the buyer's mortgage terms and time frame to acquire a mortgage are realistic to ensure that the home is not off the market for too long. The attorney will also review the terms of prorations to be sure that they are fair; the terms of the various warranties or representations of the seller to be sure that they are not too broad; and the penalties for default, to be sure that they are reasonable.

The seller's attorney's real work begins after the attorney modification period. It is at this time that the attorney will order title insurance, a survey (if required by the contract), association information and paid assessment letters, as well as to satisfy any municipal requirements (inspections, transfer stamps, or water, sewer, and septic tests) that may be necessary before the title company and the county will allow the recordation of a deed.

The "title commitment" is a written commitment to offer title insurance from a title company. The title company will do a search of the county and state records to determine the legal description and tax identification number of the property, who is currently in title to the property and what, if any, impediments to title exist. Once the title company returns its title commitment, the seller's attorney may go about obtaining documentation to satisfy any "exceptions" to title. An exception is an item which may "cloud" the title and prevent the seller from passing "clear" title on to a buyer. Such items may be building lines and easements, mortgages, mechanic's liens, municipal requirements or any number of covenants or restrictions contained in past deeds.

After satisfying all title exceptions, the attorney will prepare the various documents required to transfer title: a deed, bill of sale, affidavit of title, ALTA statement, closing statement and any other various documents required. These might include a deceased joint tenancy affidavit, a pay proceeds letter or a direction to convey. The list could go on and on! The seller's attorney will either have the seller execute the documents in advance of closing or at the closing table. In many cases, sellers need not attend the closing.

After the flurry of activity that precedes the closing date, the actual closing is a test for the seller's attorney. The buyer's attorney will make sure that all documents are properly executed by the seller, answer any questions or concerns of the buyer, and settle any contractual disputes or problems that arise. The buyer's attorney will be checking the seller's attorney's work to determine if it accurately conveys title to the buyer.

A diligent attorney can make the closing a quicker and less painful procedure from a seller. After all, the seller just wants a proceeds check, not a headache.

For Sellers
Order of Title Insurance and Survey;
Procure Illinois, County, and Local Transfer Stamps, if any;
Procure water certifications, inspections, or tests required by various municipalities;
Arrange for current mortgage payoff;
Preparation of all necessary closing documents.

For Buyers
Review inspection report and negotiate repairs, if any;
Work with mortgage broker to make sure financing deadlines and informational requirements are met;
Procure municipal transfer stamps, if any;
Explain the voluminous mortgage and seller documents in clear, easy to understand terms;
Make sure deed is proper and title policy is issued.

Return to top